New Playbook At Jones Soda

In the world of soft drinks, Jones Soda has always resembled a plucky Division II college football team, winning fans through personality, creative plays and a willingness to make the risky deep throws that don’t always pay off. Riding its growing popularity, Jones made the move from the small-time crowd to the big-time arena. But just as they got there, things changed for Team Jones: they kicked their old quarterback to the curb, unveiled new uniforms, and introduced a whole new playbook. It’s a new day for Jones. But not everyone is happy about that.

The quarterback in question, founder and CEO Peter Van Stolk, formulated Jones’ first six flavors in 1996 and subsequently cut the brand’s off-beat reputation from his own quirky, skate shop profile. The brand’s identity as an “alternative soda” started with glass long-neck bottles adorned with customer-submitted photos; it grew through collectors’ packs that included sometimes-undrinkable flavors. The 2003 Thanksgiving holiday pack featured a Turkey and Gravy soda that BevNET taste testers struggled to keep in their mouths. But the flavor wasn’t about offering a pleasant taste, it was about creating buzz. And it did: less than a year later, Jones Soda –although not Turkey and Gravy Jones Soda, thank God — showed up in Starbucks coolers across the U.S. Van Stolk had created cachet.

Although he was primarily the brand’s buzz man, Van Stolk also functioned as the face of Jones on a more personal level. Joe Steele, the co-owner of the Milford, Ohio-Based Tri-State Juice Company, said in-person calls from Van Stolk were one of the things he liked about the company. But Steele isn’t holding his breath for another visit. Van Stolk stepped down as CEO at the end of 2007, taking the fall for stock prices that, ironically, failed to live up to the buzz.

It’s got to be disappointing, because as a scourge of the big boys, Van Stolk had just completed a championship-caliber performance, outbidding Coke and Pepsi for the soft-drink contract for Qwest Field, home to the Seattle Seahawks, and pushing the company to add aluminum cans to its previously all-glass lineup.

Despite Van Stolk’s PR appeal, Jones’ stock had skidded downward in 2007, dropping from an April peak of $28 per share to less than $6 per share in December, when Van Stolk announced his intention to resign.

Van Stolk said in a written statement that he arrived at the decision to hang up his cleats nearly a year before he announced it. Jones’ Chief Financial Officer Hassan Natha told the Seattle Post-Intelligencer that Van Stolk had informed the board of his intention early last year, but that the decision had been kept “at the board level.” Regardless of the back story, however, the issue for Jones is clear: its ability, as a brand built on its funky personality, to keep customers coming back without its funkster-in-chief.

NEW PLAYBOOK

The company founder may have left the helm, but Marketing Manager Seth T. Godwin said Van Stolk remains a member of the Jones board of directors and in regular contact with the company. Jones has been different since Van Stolk left, Godwin said, but added that “(Jones has) kind of grown out of the little entrepreneurial soda company that Peter started. We needed a little bit of change.”

Regardless, Jones had already made what most observers regard as its most significant lineup change even before its long-time QB left, reformulating all of its products to eliminate high-fructose corn syrup in favor of pure cane sugar.

Godwin said Jones chose to switch sweeteners not because HFCS has been a lightning rod in the debate over child obesity in America – Godwin said the company wants to stay away from that battle – but to create a point of difference between Jones and other sodas.

The switch brought its share of growing pains. The company needed new equipment to go with the new ingredient, but Godwin called the transition “exciting” and said customers appreciated the cane-enhanced flavor profile.

While the move to sugar might very well resonate with consumers searching for that sweetener’s more virtuous aura, it’s still too early to tell if it cuts the mustard with either new fans or the brand’s old adherents.

But Joe Steele, the Ohio-based distributor, said he doesn’t see much of a difference.

“They say it tastes better. I really can’t tell,” Steele said. “I know it costs more.”

Steele added that he doesn’t think most Jones fans – who skew young, demographically – care about whether or not their soft drink uses HFCS. “Those kids are typically eating Big Macs and French fries,” Steele said.

Lately, Steele said, Jones makes him scratch his head. They used to be about running with the little guy, he said. Now, Steele said, he no longer knows where Jones is headed.MEET MARTHA STEWART

But Jones had little choice but to adapt and change. Starbucks – the company that put Jones’ quirky glass bottles into the hands of millions of consumers across the U.S. – scuttled their distribution agreement last June to make room for expanded menu offerings.

Jones hasn’t lost its toe-hold in national chains altogether: you can still find them in Panera Bread Bakery Cafes. And the company hasn’t been content to stand still while the ground shifts beneath it. Jones is taking new stabs at building an independent network, and is also being trumpeted by retailers like Wal-Mart and K-Mart as one of those slightly upscale brands that retailers now try to incorporate across all categories. Martha Stewart, meet Jones Soda.

Meanwhile, Godwin said, the company has big plans for the near future under the direction of interim CEO Steve Jones, a former Coca-Cola executive and Jones board member.

One bright light is 24c –the company’s response to the vitamin-infused water phenomenon – already making its way onto Whole Foods’ shelves in powder form. The company has also released a ready to drink version of 24c, one that Godwin said entered the market at an opportune time, as Coca-Cola’s purchase of glaceau has left a vitamin water-shaped hole in the independent distributor system.

But Jones also has higher ambitions for 24c. With more vitamins and minerals than anybody else, he said, the company wants 24c to create a premium fortified water segment, much like Perrier created the premium bottled water segment.

Whether or not 24c cuts out new space for Jones in the cooler case, Godwin said, the company plans to make its entry into the functional drink market later this year. The product is still in the early stages of development, so it’s too early for Godwin to discuss flavor profiles – or much else, for that matter – but he said beverage will likely be tea-based and will certainly include an amino acid called Gamma Aminobutyric Acid – or Gaba, for short. The substance is popular in Japan, Godwin said, where golfers and video game players consume it for mental clarity and focus. If the additive is a hit, Jones will have a jump on copy-cats, Godwin said, because the company has an exclusive two-year contract to use Gaba in beverages.

Despite all the big changes, Godwin said Jones Soda wants to remain the same company it has always been.

“We’re still trying to stay true to what our brand is all about, which is self-expression,” Godwin said.

But Steele remains unconvinced.

“To me, I guess they’re chasing everybody else,” he said. “I’m not sure if that’s who they are.”

Maybe it isn’t, but scrappy little Jones Soda has made it to Wal-Mart shelves, and the end zone at Qwest Field. That represents an enormous new arena with a lot of new seats to fill. Jones needs to fill those seats, but can they do it with the new lineup? Only time will tell.